Walmart will acquire web retailer Jet.com for $3.3 billion in order to boost its online business. The deal is the largest ever purchase of U.S. e-commerce startup. While Walmart has plenty of bricks and mortar stores, the company has struggled to grow its online business. Walmart knows it needs to be competitive with Amazon who has branched out into selling groceries and other consumer goods traditionally bought at stores. It’s no secret that e-commerce is on the rise. We now have a whole generation of shoppers who grew up with the internet and are very comfortable with and may even prefer buying ordinary staples online instead of going to a physical store.
There are a couple of interesting points to note about this transaction from an integration standpoint.
1. Keeping Key Employees
It’s important to assess key employees at the seller’s organization and put plans in place to keep them post-closing. Keep in mind, the best person for the job might be in the seller’s organization. Jet founder Marc Lore will take a senior leadership position in Walmart’s e-commerce division while Walmart’s top online executive Neil Ashe will leave. Part of the reason for acquisition is the expertise of a star player who will help Walmart be more effective at e-commerce.
2. Adapting to the Seller
The amount of equity you acquire in a company does not indicate what you should do from an integration standpoint. Just because you acquire 100% of a company does not mean you should force the seller to comply with all of your practices.
It would not make much sense if, after the acquisition, Walmart expected Jet to comply with the Walmart way of doing things. Why did Walmart acquire Jet in the first place? They wanted the knowledge and expertise. Walmart plans to keep Jet.com and Walmart.com operating as separate websites. It also plans to integrate Jet’s software into its own website.
A critical component to being successful at integration is understanding what level of integration you need. You must be disciplined and understand why you are buying the company whether is for their expertise, culture, members, etc. Whatever the case may be, keep in mind you may need to integrate your organization to the seller’s. This sets the tone for the way you will be thinking about integration. Don’t assume that everything the seller does needs to change.